In a carefully worded post to X that earned over 500,000 impressions, blockchain analytics provider Arkham claimed that it had somehow deanonymized some of Zcash’s shielded transactions.

Shielded “z-address” transactions, which make up approximately one fifth of all Zcash transactions, are supposed to be completely private.

However, Arkham claimed to have labeled “more than half of Zcash’s shielded and unshielded transactions,” naming the individuals and institutions responsible for the majority of the data on the blockchain.

The post immediately earned multiple Community Notes, X’s volunteer fact-checking system, brought in after Elon Musk fired the platform’s actual fact-checkers.

The top two notes disputed the claim that Arkham had deanonymized shielded transactions.

“Z-Z transactions have not been deanonymized,” wrote one contributor. “Arkham only provides data for the remaining ~80% of transparent transactions.”

The second note agreed. “Arkham did nothing groundbreaking here despite the clickbait title,” it read.

Arkham perpetuates confusion about deanonymizing Zcash

Disingenuously, Arkham included both shielded and unshielded transactions in its claim to have deanonymized “more than half” of Zcash transactions, without disaggregating the contribution of the two groups.

Technically, a lawyer could argue that 0% of shielded and 100% of unshielded, altogether, account for “more than half” of Zcash transactions.

Obviously, it’s entirely unclear why Arkham would have included the word “shielded” at all in this example, despite its function as a legal loophole.

Unapologetically, Arkham cited its supposed transparency of the US government’s seizure of Zcash from AlphaBay founder Alexandre Cazes eight years ago.

Enraged, Zcash users quickly jumped into the comment section to dispute Arkham’s discovery. One user offered payment if Arkham could deanonymize his shielded address.

Another user asked Arkham to clarify that it could trace shielded-to-shielded (z-to-z) transactions.

Read more: Arkham ‘deanonymizes blockchains,’ obscures its own ARKM token sales

Fake news about Arkham deanonymizing Zcash

Longtime followers of Zcash are aware of unshielded defaults. Because Zcash decided to make privacy opt-in versus opt-out, the default behavior of most senders is to broadcast unshielded, t-transactions. 

Although Arkham let a few hours go by while enjoying its engagement prize for broadcasting nearly-fake news, it eventually walked back its outrageous claim.

After about 18 hours had transpired since its original claim, it finally posted an admission, writing, “z->z transactions are not accounted for in the 50% of Zcash transactions labeled.”

Although it had the opportunity to apologize and retract its original claim, it declined. Even the admission took the founder of Zcash himself, Zooko Wilcox-O’Hearn, forcing Arkham’s hand about its disingenuous inclusion of shielded transactions in its original, lumpy, and inaccurate claim that merely referred to unshielded transactions alone.

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